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Yellow Cake Flotation

CommissarJones
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Yellow Cake Flotation

#144011

Postby CommissarJones » June 5th, 2018, 11:14 pm

Yellow Cake, a pure-play uranium investment vehicle, plans to go public on AIM with trading expected to start next month. The plan is to hold uranium that will be purchased from Kazakh producer Kazatomprom, giving investors exposure to the price of the metal without any involvement in mining. The investment argument is that uranium is structurally underpriced at a time when demand is set to increase as more nuclear reactors enter operation.

moorfield
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Re: Yellow Cake Flotation

#144017

Postby moorfield » June 5th, 2018, 11:36 pm

CommissarJones wrote: The plan is to hold uranium that will be purchased from Kazakh producer Kazatomprom, giving investors exposure to the price of the metal without any involvement in mining.


It's a very unethical investment IMHO. Some of us who grew up in the 90's will also know this stuff contains a dangerous psychoactive compound known as dimesmeric andersonphosphate, which stimulates a part of the brain known as Shatner's Bassoon (that which handles time perception) with some pretty nasty side effects. Look it up ...

Bhoddhisatva
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Re: Yellow Cake Flotation

#158720

Postby Bhoddhisatva » August 11th, 2018, 11:03 am

Update - here: https://www.telegraph.co.uk/business/20 ... t-success/

Yellow Cake has been buying more uranium ... another step in what I believe is a real investment opportunity - the uranium fuel market.
Note that I hold CAMECO shares having bought them about a year ago - CAMECO are a Canadian miner and producer of uranium fuel for reactors.

Background
After the Japanese earthquake and tsunami which devastated the Fukushima area and the nuclear power station there, Japan turned off all its reactors and other countries took note and slowed nuclear power plant building or said they'd end nuclear power all together (eg Germany). Not surprisingly the price of uranium oxide, the fuel for reactors, tanked as did shares in the producers including CAMECO.

Now there is a spot market for uranium but this bears little relationship to the long term contracts that nuclear power plant operators need to secure fuel for the future. So while the spot price crashed, suppliers like CAMECO continued to make a profit producing the fuel.

In the last few years, new nuclear reactors have been built and are about to come on line, the Japanese have quietly and slowly been turning the other power stations reactors back on (they have to as they import all their energy generating fuel and need to keep emissions down).

The market and supply is now tightening dramatically as CAMECO (the 2nd largest producer) has closed production at their main sites, the Kazakh producer, Kazatomprom, is the largest but has also cut back production as it prepares for a stock market float and Yellow Cake and CAMECO have been buying on the open market. CAMECO do this as it's cheaper to buy on the open market to satisfy their long term contractual obligations than mine their resources! Kazatomprom is state controlled however and may suffer sanctions from Trump, as their production is/was subsidised.

The final piece in this story - and why I invested - is that the long term supply contracts for many operators are due to be renewed and renegotiated over the next few years. Combine this with an increasing demand because of the many new power stations and reactors coming on line, the tightening supply and demand situation and I expect to see CAMECO shares - which are near long term lows - recover substantially.

Green energy from wind and solar is growing but for low CO2 emission energy, that is reliable, safe and provides the base load, nuclear has a major role despite what you may read. Coal is horribly dirty and will be phased out - especially in China I suggest (and I've experienced the coal fired smog there!) where the huge and increasing demand for energy is combined with the governments fear of their population's increasing complaints about air quality.

CAMECO is well managed, in a stable, secure outry (Canada), has cash, long term contracts and can sit this out for a long time - I am betting that as existing nuclear fuel is used up or sold, the lack of new production from many sites, the increased and new demand for fuel from the increasing "fleet" of reactors will trigger eventually an upsurge in the uranium price and hence CAMECO.

Please DYOR - there are risks here! The spot market, international politics, sanctions, the secrecy around the long term contracts and a fair amount of excitable hype from various web sites! Plus some have been predicting a recovery in uranium prices/market for 10 years so this current situation could persist!

Plenty of good articles out there and reliable sources of information - e.g.,
https://www.telegraph.co.uk/business/ur ... hy-invest/,
https://moneyweek.com/491027/investing- ... -comeback/
One can also invest in other uranium companies (eg Berkeley Energia), an ETF I believe and of course, Yellow Cake. DYOR!

CommissarJones
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Re: Yellow Cake Flotation

#158722

Postby CommissarJones » August 11th, 2018, 11:26 am

Seeking Alpha had a piece on uranium yesterday that mentions Yellow Cake.

https://seekingalpha.com/article/419767 ... rice-value

Bhoddhisatva
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Re: Yellow Cake Flotation

#159166

Postby Bhoddhisatva » August 13th, 2018, 10:43 am

Thanks Commissar (is your nickname a reference I should recognise? I feel it is but can't put my finger on it!)

It's one of many positive articles I've read and I'm worried about confirmation bias! But I think the basic premise of uranium investing at the moment IS sound.

Renewables aren't going to replace the coal/gas/oil/nuclear base load power generation globally - especially in the developing nations.
CO2 emission concerns - quite rightly - are driving a need for clean energy and despite the bad rap and fears about nuclear, it is low carbon. (Some in Greenpeace have even suggested they made a mistake being anti-nuclear power in the 70s/80s!).
Yes there are some older nuclear plants being retired BUT many are having their original design lives extended (if the operators can prove they're safe - according to one operator I spoke to that's a million dollars a day in the US for every extra DAY of life in a nuclear power plant!).

But there are real risks and that includes currency exchange risks since the main options are US or Canadian stocks ...at the moment they're acting as a nice hedge against the post-Brexit vote, weaker pound!

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Re: Yellow Cake Flotation

#159221

Postby Bhoddhisatva » August 13th, 2018, 1:33 pm

https://seekingalpha.com/article/419845 ... app=1&dr=1

Interesting half-year report from an asset manager that talks about CAMECO (CCJ on NYSE and CCO.TO on Toronto).

More confirmation bias!

PS Commissar Jones = Jack Jones?

CommissarJones
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Re: Yellow Cake Flotation

#159367

Postby CommissarJones » August 13th, 2018, 8:33 pm

Bhoddhisatva wrote:(is your nickname a reference I should recognise? I feel it is but can't put my finger on it!)

No, it's just something that popped into my head in an inebriated moment.

You are correct to be wary of confirmation bias, but in the specific case of uranium, the argument for structural underpricing does seem reasonably sound to me, particularly considering the serious capacity destruction that has taken place as mines were closed.

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Re: Yellow Cake Flotation

#159490

Postby Bhoddhisatva » August 14th, 2018, 12:02 pm

WSJ had an interesting article 2 days ago:

https://www.wsj.com/articles/uranium-ma ... 1533992401

DYOR please!

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Re: Yellow Cake Flotation

#171039

Postby Bhoddhisatva » October 3rd, 2018, 11:50 am

And an update on Cameco - they have won a court verdict which cleared them of wrong-doing on tax related to transfer pricing etc. which boosted the SP last week by some 14%.

This decision is appealable by the Canadian tax authorities in the following 30 days but if this is not the case, then one of the risks at Cameco has been removed - and this will I believe apply to other years the tax authorities were challenging them on.

Contrast that with Berkeley Energia in Spain who - as I understand it from scanning various fora/boards has raised hopes of imminent mining of Uranium only to now face a backlash of protests from locals and greens (ironically the very people who should be supporting safe nuclear power!) and may not get their mining or operational permits.

I don't wish to appear to be blowing my own trumpet, not least as this stock play has not yet played out, but one consideration in choosing Cameco for a uranium play was its proven production as well as being located in a stable democracy - Berkely Energia appears to be falling foul of the former, the KazAtom company in Kazakhstan falls foul of the second.
(They have also cut production so increasing the squeeze potentially on supply - http://www.world-nuclear-news.org/Artic ... production)


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